The issue is regarding the "Files" Group Policy setting when editing it on the Windows side in Group Policy Management.
The "Edit File" feature doesn't work on it's own to apply the changes made. You can't "Apply" after making changes.
Defect ID #763319 has been raised to address the issue in a future version.
Workaround: Clicking "Okay" in the File Properties window after making changes works to save the changes and the updated policies get applied. It's not ideal as it closes the dialog window but it does work.